Risking Your Wealth? Discover the 10 Nations Whose Economies Could Tumble Any Moment

The current economic downturn has lasted for many years. Several countries face severe economic challenges, causing significant disruption at various levels. The fledgling economies make life difficult for a common person and cast doubts about their economic futures.

These ten countries face a problematic voyage in pursuing long-term economic progress and well-being, regardless of any particular ranking. A strong dollar, rising borrowing prices, and skyrocketing inflation have made it far more expensive for dozens of economically struggling countries to repay loans and raise capital, leading to many defaulting last year.

Let’s learn more about nations in debt distress or have already stopped making payments on foreign debts listed below.

Ukraine

Ukraine’s economy has been negatively affected by the conflict with Russia. In 2022, the World Bank expects the country’s economy to shrink to 45%. A prohibition on exporting grains and other staples has been imposed for food security due to the disruption of crucial export channels and trade.

With rising poverty rates and a predicted $38 billion budget deficit in 2023 due to lower tax collections, the cost of reconstruction is expected to be $349 billion. Ukraine’s position in the world’s average 5-year GDP has dropped by 35%.

Russia

Due to poor institutions, including a shaky rule of law, inadequate property rights protection, and pervasive corruption, Russia’s economy has underperformed for 15 years. Since the conflict in Ukraine, the nation has been subject to harsh sanctions from the West, which have limited its access to foreign exchange, banking networks, technology, and energy markets.

As a result, Russia has experienced severe shortages, significant inflation, and rising costs. According to the World Economic Outlook April report, Russia has the lowest rating for the world’s average GDP, with an average loss of -8.5% from 2018 to 2022.

Afghanistan

Afghanistan’s economy has significantly suffered due to decades of violence and instability. Wars have devastated entire cities, uprooted millions of people from their homes, and damaged industrial and commercial infrastructure.

According to a United Nations Development Programme (UNDP) assessment from December 2022, the Afghan economy has lost $5 billion since August 2021, wiping out a decade’s buildup.

This number does not include the ongoing losses inflicted throughout the years of fighting. Afghanistan has consistently had a low GDP per capita compared to other nations.

Sri Lanka

Following economic mismanagement made worse by the COVID-19 pandemic, which also caused a political crisis and left Sri Lanka without enough money for primary imports, Sri Lanka defaulted on its foreign debt last year.

The South Asian island nation may be able to obtain extra funding of close to $4 billion from the World Bank, Asian Development Bank, and other lenders due to the IMF signing a $3 billion bailout plan last month. Sri Lanka is also revising some of its internal debt to complete by the end of May.

Syria

Syria’s prolonged civil war has negatively impacted its economy since 2011. Oil production and exports, which were important sources of income for the nation, have significantly decreased due to the conflict. Millions of people have been displaced, and infrastructure, including industries and companies, has been devastated.

The United Nations estimates that the war in Syria has cost the world economy more than $400 billion. A staggering 75% of Syrians depend on humanitarian aid to meet their basic necessities.

Belarus

Belarus has long-standing economic problems that weak legal systems, inadequate property rights protection, and pervasive corruption have exacerbated. Furthermore, the West has sanctioned the nation unprecedentedly ever since the contentious 2020 presidential election.

Due to these limitations, Belarus cannot utilize its foreign exchange reserves, banking institutions, technological breakthroughs, or energy markets.

As a result, Belarus is experiencing high inflation levels, a severe economic slowdown, shortages of essential goods, and price rises. According to the World Economic Outlook’s April edition, its average 5-year GDP is 0.0%.

Egypt

Egypt’s tourism-based economy took a beating from COVID-19 and rising food and energy costs, leaving it cash-strapped and unable to keep up with mounting obligations. By agreeing to a flexible currency, a more prominent role for the private sector, and several monetary and fiscal changes, Cairo was able to clinch a new $3 billion IMF package in December.

Economic activity has been hampered by currency and import restrictions despite three significant devaluations since March 2022, which cut the pound’s value in half. At a level exceeding 30%, inflation is currently at a more than five-year high.

Solomon Islands

Despite the abundance of timber and underutilized mineral resources on the islands, such as lead, zinc, nickel, and gold, most of the population relies on subsistence farming, fishing, and artisanal logging.

The COVID-19 pandemic has seriously affected the nation, harming the tourism sector, among other industries. According to the country’s average 5-year GDP estimate in the World Economic Outlook’s April issue, -0.7%.

Micronesia

The country’s medium-term economic future is shaky due to its dependence on US aid and the underwhelming performance of its small and stagnant private sector. On the islands, there aren’t many minerals with a marketable worth.

The region’s tourism potential is hampered by isolation, poor infrastructure, and domestic air and boat transportation shortage. In the five years preceding 2022, its GDP has decreased by an average of 0.8%.

Ethiopia

The fact that Ethiopia is about to experience its sixth straight unsuccessful rainy season could extend the drought, which already affects 24 million people. Various national conflicts are also upsetting people’s lives and making it difficult for humanitarian agencies to provide relief.

The violence in Tigray, northern Ethiopia, may be resolved by a peace agreement signed in November 2022, but 28.6 million people still require humanitarian assistance.

Conclusion

The economic conditions of most countries in the world are less than favorable. Factors like COVID-19, high inflation rates, economic disasters, and political conflicts have negatively affected many countries.

These problems are often exacerbated by corruption, mismanagement, and lack of infrastructure and resources. IMF debts come with severe conditions that will impact the ordinary person. All these factors affect these economically downtrodden countries much more than the other states.

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